In Tunisia, Innovative Public-Private Partnerships could Open the Door to Ultra Fast Broadband for at least 20 Percent of the Population

On February 18, 2014 in Tunis, the results of a diagnostic study for the development of ultra-fast broadband in Tunisia were presented to all the key actors in the sector. Financed by the Arab Financing Facility for Infrastructure (AFFI), this study (which is not yet available) proposes as a vision for Tunisia a target of 50 percent ultra-fast broadband coverage for the population in 2020 and 100 percent coverage in 2025, while focusing in the short term on priority targets for such as communities, businesses, academic institutions, health centers, and post offices.

The deployment of broadband and ultra-fast broadband electronic communications networks is a major economic and social development for Tunisia. The Government's desire to promote deployment of broadband and ultra-fast broadband networks across the entire country is part of a strategy aimed at ensuring the conditions for long-term growth and establishing Tunisia's position as a regional leader in information and communication technologies (ICTs). However, what combination of ultra-fast broadband technologies among fixed, mobile, and satellite is best suited to making this desire a reality, in view of the budgetary constraints facing the public authorities and Tunisian consumers?

The Consortium appointed for the study developed a socioeconomic model to identify the optimal technological mix for deployment of ultra-fast broadband in Tunisia, with a high degree of geographical granularity, delegation by delegation. It was found that fiber to the home (FTTH) could be developed with a profitability time frame of 10 to 15 years for 5 percent to 12 percent of the population (Alpha zone) and would require an initial capital investment (CAPEX) of a minimum of TND 55 million. With a profitability time frame of 25 years, FTTH could cover the Beta zone, representing up to an additional 13 percent of the population and would require an initial investment of TND 200 million (a sum that could be reduced through initiatives implemented by private operators). For the remainder of the country (Gamma zone), however, fiber to the curb (FTTC) technologies for 52 percent of the population,[1] as well as 4G/LTE mobile technologies for the remaining 30 percent of the population, would be prioritized (although a number of remote areas could be covered by satellite solutions), for an initial investment of TND 290 million. Thus, a total investment of TND 545 million (US$313 million) would bring very high-speed broadband to all Tunisians, and the magnitude of the investments should be compared, for example, to the offer of TND 205 million made in 2012 by the operator Tunisiana for the third fixed and 3G license or with this operator's 2012 profit of TND 1,144 million. The figure below combines the results by governorate, taking into account that in the areas where fiber optic technology will be available, there will also be ultra-fast mobile coverage.

Ultra-fast fiber optic broadband brings several advantages, in particular higher speeds (100 megabits per second) and a stable connection for each user, as well as increased reliability (because fiber optic connections are less sensitive to electromagnetic disturbances and interference). In addition, it proves indispensable when numerous terminals (smartphones, tablets, computers, etc.) generate high volumes of traffic from the home.

Although the profitability of the Alpha zone is considered sufficient for fiber to the home to be deployed by private sector operators, it is less certain for the Beta zone. Therefore, how can Tunisia enhance the value of one of these assets; namely, the high concentration of 20 percent of the population in a small area, in order to optimize the costs of deploying ultra-fast broadband?

The study suggests that the Government should take action in the Beta zone as an “informed investor” within the framework of a public-private partnership (PPP) to facilitate and speed up deployment of ultra-fast fiber optic broadband and allow Tunisia to make a qualitative leap forward in the area of digital infrastructure. In concrete terms, considering this initial investment of TND 200 million (US$126 million) in the Beta zone, it is recommended that public and private actors explore without delay an innovative PPP model based on the creation of a project consortium/company acting as a passive infrastructure operator and offering open, nondiscriminatory access to the FTTH network. This is one of the main recommendations of the World Bank's recent study on "Broadband Networks in the Middle East and North Africa: Accelerating High-Speed Internet Access," namely, the development of new models of infrastructure supply, which already exist in the Gulf region and could soon become a reality in North Africa.

[1] Subject to unbundling, which would effectively ensure the profitability of this technology